Good year for Sirius Real Estate

Sirius Real Estate CEO, Andrew Coombs (Center) said the company was on track to continue its expansion plan and increase profitability.

Sirius Real Estate, which is listed on the JSE’s AltX, recently announced a turnaround in its business parks and flexible work-space offering to the German market.

While SA’s listed property index is set to come under pressure during the rest of the year, certain companies with or those completely based offshore are standing out as top performers.

In the six months to the end of September, the London AIM-listed Sirius almost doubled its H1 pretax profit to GBP28.3m, from a prior-year profit of GBP15.3m. While like-for-like recurring profit jumped 35.3% to €6.9m thanks to good demand for properties.

Adjusted net asset value per share had increased 5.5% to €50.13 at the end of September compared with €47.51 at the end of March. The group declared a dividend of €0.92‚ up on €0.84 declared at the end of March.

Sirius was rolling out a capital expenditure (capex) programme and that storage was a major component, CEO Andrew Coombs said in a statement.

“The most significant element of our capex investment initiatives is the transformation of difficult space into our Smartspace products‚” he said.

Sirius’s smartspace offering includes storage facilities and specialist office space for small businesses.

As at the end of September‚ 74‚235m ² or 6.7% of the lettable space of the total portfolio‚ had been converted into Smartspace‚ said Mr Coombs. “We would expect this to increase to closer to 8% after the completion of the capex investment initiatives.”

The self-storage concept has grown aggressively in Europe and the US.

Last month‚ Stor-Age Property Reit became the first South African storage specialist to list on the JSE in anticipation of increasing demand for storage facilities in SA.

Portfolio manager at Ivy Asset Management‚ Chris Segar‚ said that Sirius’s results were pleasing.

“The successful roll-out of the capex programme and their ability to let unlet space‚ should manifest in enhanced rental income in the latter half of their financial year‚” he said.

“In addition‚ a further driver of income can be expected from the reduction in the cost of debt to 3.3% from 4.3%.”

Sirius owns a portfolio of business parks in German cities and towns such as Berlin, Bonn, Munich, Mannheim and Frankfurt.

Its strategy is to buy old industrial buildings, mostly on city outskirts, and redevelop them into mixed-use business parks that offer a combination of storage units, offices, warehouses, conference rooms and small retail outlets.